Rally in Tokyo leads Seoul, Hong Kong higher

V.Phani Kumar

HONG KONG (MarketWatch) -- Japanese shares snapped a three-day losing streak to lead Asian markets higher Monday, boosted by gains in exporters and resource stocks, as investors hope for more fiscal stimulus from Tokyo.

The rebound came despite heavy losses in Japanese consumer-finance shares on a report that Takefuji Corp. is weighing plans to file for bankruptcy protection, according to Nikkei.

Chinese equities advanced as trading resumed after last week’s Mid-Autumn Festival holidays, while Hong Kong shares stretched their winning run to end at an eight-month high. South Korean shares ended at their highest level in more than two years, while Indian shares were on their way to similar gains.

Gains in Tokyo came on the heels of Friday’s strong Wall Street performance, but investors also hoped for a weaker yen after the Kyodo news service reported that Prime Minister Naoto Kan may instruct his cabinet to draw up an extra budget for the current financial year.

Overall gains were curbed by steep losses in consumer-lending stocks, with Aiful (8515)
AIFLY, +23.29%
plunging 22% and Acom
ACMUY, +0.00%
(8572) losing 10% after the Nikkei reported that Takefuji may file for bankruptcy protection as refunds for interest overpayments exact a steep toll on its finances. Although a trading halt in Takefuji (8564)
TAKAY
shares was lifted late in the afternoon session, no trading took place as sellers far exceeded buyers. Read more about Takefuji trading in Asia Markets.

“There is a very high possibility that claims for interest repayments will increase at a much faster pace” due to bankruptcy fears, which will likely require consumer-lending firms to put aside more reserves and raise more money, said Naoki Fujiwara, fund manager at Shinkin Asset Management.

Some property developers in China fell after Beijing announced its latest measures to curb the nation’s hot property market. The government said it has banned companies that failed to develop land more than a year after winning site auctions from bidding for more land. Furthermore, cities that haven’t met the central government’s public-housing requirement will be barred from offering land for luxury housing.

The new measures are “not harsh,” but they do send a strong signal to developers that if the property market heats up again, more stringent action could follow, said Tu Chunhui at China Development Bank Securities.

In Sydney, shares of Wesfarmers
WFAFY, -0.91%
(WES) rose 2.9% after the company said it will invest more than 600 million Australian dollars ($575.8 million) in its Bunnings hardware-store chain in New South Wales.

Nufarm (NUF) shares rose 1.2% after the company said it secured waivers on some banking covenants and that its lenders have agreed to provide it with a lending facility through mid-December. Trading was halted earlier, pending an announcement on its financing arrangements. In July, the agrichemical company breached two of its debt covenants with its banking syndicate.

Some exporters pared losses or extended gains in the wake of media reports citing speculation that South Korean authorities bought dollars Monday to curb the won’s rise. The U.S. dollar weakened against the Korean currency, despite the suspected intervention. The dollar, which had fallen as low as 1,145 won earlier in the day, lately recovered to 1,147.71 won. Read full story on the suspected currency intervention.

Kia Motors
KIMTF, -23.10%
climbed 1.5%, while Hyundai Motor
HYMTF, -5.00%
erased early losses to end flat, despite news that it will recall some 140,000 Sonata sedans in the U.S. due to steering problems.

Hyundai Engineering climbed 4.9% on expectations of a bidding war between Hyundai Motor Group and Hyundai Group for a controlling stake in the firm. Hyundai Merchant Marine and Hyundai Elevator both soared 15% on hopes they may be subject to a deal battle, depending on who winds up with the Hyundai Engineering stake.

In foreign-exchange markets, the euro was at $1.3444 against the dollar from $1.3493 late Friday in New York, and at ¥113.21 from ¥113.70. The dollar was buying ¥84.19 compared with ¥84.28.

Bank of Japan Gov. Masaaki Shirakawa said Monday that the central bank will look into the impact of the yen’s rise on the nation’s economy at a policy board meeting next week, reiterating that the bank will take appropriate steps if necessary.

“Intervention risk remains high... the market will use periods of global risk aversion to drive (dollar/yen) lower to test for any ‘line-in-the-sand’ levels,” RBC Capital Markets said in a note to clients.

Spot gold was at $1,297.50 per troy ounce, up 50 cents from Friday’s New York close. November Nymex crude-oil futures were up 35 cents at $76.84 per barrel on Globex.

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